National news

Mets took $90 million in Madoff money, trustee says

Fred Wilpon, associates alleged to have gotten $300 million from scammer

By

SamMamudi

NEW YORK (MarketWatch) — The owners of the New York Mets baseball team used tens of millions of dollars from Bernie Madoff’s firm to fund their franchise, according to a lawsuit made public Friday.

In a complaint filed on Dec. 7, Irving Picard, the trustee acting on behalf of Madoff’s victims, alleged that Fred Wilpon, principal owner of the Mets, was a beneficiary of Madoff’s Ponzi scheme, and that money from Bernard L. Madoff Investment Securities went directly to the team.

Wilpon’s firm, Sterling Equities, and its partners had 483 accounts with Madoff’s firm, the complaint says. Sixteen of those accounts belonged to the Mets, and the lawsuit alleges that these accounts withdrew more than $90 million in “fictitious profits.” Read Picard’s complaint against Wilpon and his partners.

Mets owner seeks cash

(2:54)

New York Mets owner Fred Wilpon is exploring the sale of a stake in the team after he was sued by a trustee gathering assets for victims of Bernie Madoff's Ponzi scheme. Matthew Futterman reports the effect the scandal’s had on the Mets.

“Much of the approximately $90 million of other people’s money withdrawn from the Mets’ accounts [with Madoff’s firm] helped fund its day-to-day operations,” according to the complaint.

The suit claims that Sterling and related entities received about $300 million in “fictitious profits from Madoff and used the purported equity in their … accounts to, among other things, secure hundreds of millions more in loans and lines of credit.”

The suit states that it’s the trustee’s intention to recover the $300 million, including the $90 million that allegedly was wrongfully withdrawn by the Mets.

“The plain truth is that not one of the Sterling partners ever knew or suspected that Madoff ran a Ponzi scheme,” they said. “Because the trustee has no evidence to support his claims even after a year-and-a-half review of over 700,000 pages of documents and many, many hours of depositions, he has created a claim that we ‘knew or should have known’ that Madoff was a fraud.”

It remains to be seen the extent to which the release of the lawsuit’s details will affect the Mets. Wilpon said last week that he was considering selling a 20% to 25% stake in the baseball team as a result of financial uncertainty created by the Madoff trustee’s lawsuit.

Looking the other way

The suit alleges that Sterling’s partners had “many objective indicia of fraud before them,” but “chose to simply look the other way.”

“There are thousands of victims of Madoff’s Ponzi scheme. But Saul Katz is not one of them. Neither is Fred Wilpon. And neither are the rest of the partners at Sterling Equities,” Picard’s complaint charges.

Madoff trustee takes aim at J.P. Morgan

(2:38)

J.P. Morgan Chase stood "at the very center" of Bernard Madoff's fraud, according to a lawsuit. Michael Rothfeld has details.

Among the examples the suit provides as evidence that should have alerted the partners are misgivings about Madoff held by both Merrill Lynch and Ivy Asset Management and relayed to some Sterling partners.

The suit also claims that Sterling Stamos, a hedge-fund partnership between Sterling and Peter Stamos, rejected Madoff.

But the Sterling partners questioned how they were expected to know of the fraud when it escaped the notice of several government agencies.

“The trustee is suing not only for what he defines as ‘fictitious profits’ but for monies that we deposited with Madoff over almost 25 years. That is outrageous, unfounded and inconsistent with the law,” Wilpon and Katz said.

A statement by Sterling’s lawyers said that aside from the $300 million in profits Picard claims Sterling took, Sterling also lost about $160 million in some of its Madoff accounts.

“Madoff investments did not ‘fuel’ our clients’ operating businesses,” according to Sterling’s attorneys. “The Sterling partners’ wealth was generated by their hard-earned success in real estate, sports, media and other businesses — not by investments with Madoff.”

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.